ADDRESSING THE TYRANNY OF DISTANCE

Posted by Joel Fitzgibbon257.20sc on June 29, 2015

Surely most people who choose a political career are, at least partly, motivated by a desire to reduce poverty and inequality. Certainly I was.

While we must always strive to do better, by international standards poverty and inequality in Australia are modest. Indeed one of the little known but significant achievements of the former Labor Government is that inequality in Australia actually narrowed during the Global Financial Crisis.

But as a rural member of parliament, I’ve held a long-term interest in what is often called “spatial inequality”. That is, the difference in the fortunes of geographical locations.

The struggles of many of our rural, regional and remote communities are well known. Many are suffering what is known as “dynamic decline”; a process which often begins with the closure of a key local employer, maybe an abattoir or manufacturing plant.

These closures cause the most employable to leave the town seeking opportunities elsewhere. Those left are the ones less well placed to make an economic contribution; for example the elderly or those with low skills. This dynamic in turn produces an economic downward spiral.

I am grateful to PwC for its recent report entitled “Understanding the economy from the ground up”. One of the key findings of the report was that economic activity in Australia is highly concentrated in certain locations, typically in our capital cities. Indeed the report suggests that close to one in every five dollars of national income comes from just 10 locations. Further, one in three locations of those surveyed had contracting economies last year. Both of these trends according to the survey have been intensifying over the course of the past 14 years and are expected to continue.

Since 2000/01, the Australian economy has grown by 46 per cent in real terms. The report points out that while growth in our capital cities over that period totalled between 37 per cent and 76 per cent, the rural economies included in the survey contracted by between 25 per cent and 61 per cent. This trend should be of grave concern to all policy makers.

The key aim of the PwC exercise was to provide guidance to both government and the private sector when making investment decisions – making sure “the right decisions are made in a specific location for the right reasons”. There is a strong message for government in this research; the policy response required for a local economy in structural decline is different than that needed for a town or region seeking to unlock unfulfilled growth potential.

So there are two key points here. First, we need to understand what’s happening in local economies. Second, we must ensure the policy approach reflects need. Two polices initiatives of the former Labor Government sought to reflect these realities.

The first was the creation of Regional Institute Australia; a research body devoted to helping us better understand regional economies and their needs. The second was the establishment of RDAs, the regional committees charged with setting local economic priorities. Local people are best placed to identify and develop local solutions and information, facts and data will largely determine the extent of their success in doing so.

To its credit, the Abbott Government has retained both these bodies. But what is the next step?

In the two years since the last election the Abbott Government has initiated no less than six white papers. Just one is complete. A white paper is a message of policy intention; it doesn’t of itself deliver economic outcomes.

So as spatial inequality continues to grow, policy inertia in Canberra exacerbates the problem. It’s time to move beyond the spin, such as the ill-conceived relocations that have been proposed with no overarching framework analysis.

Neither will claiming the welcomed completion of Free Trade Agreements Labor began in office cut the mustard. It’s past time the Abbott Government demonstrated a capacity to produce an original thought and followed through with some action.

This article was first published in FARMONLINE on Monday, 29 June 2015.